Tax reform: Haddad wants less regulation PL – 03/21/2024 – Market

The Minister of Finance, Fernando Haddad, wants to reduce the number of projects that will be sent to the National Congress for the regulation of tax reform.

The proposal is to bring together in a single bill to complement the rules of the Selective Tax and the two new taxes that will be created, the federal CBS (Contribution on Goods and Services) and the IBS (Tax on Goods and Services), from states and municipalities. .

The second project would bring together the regulation of the IBS Management Committee and the new rules to regulate the so-called fiscal administrative process, which deals with disputes between taxpayers and the tax authorities. In other words, Carf (Administrative Council for Tax Appeals).

The initial proposal was to send the four themes in separate projects, but Haddad has already signaled to the Ministry of Finance team that he can combine the proposals into two projects to facilitate processing, according to the minister’s assistants interviewed by the Sheet.

For some members of the Ministry of Finance, including the taxes being created in the same text makes sense because the Selective Tax (better known as the sin tax) is connected to the CBS.

Both will be charged by the federal government. If the tax burden of the Selective Tax is higher, that of the CBS may be lower and vice versa. This is because the reform has as its principle neutrality in relation to the current load.

A third, ordinary bill (which requires a simple quorum for approval) must be sent to regulate the FNDR (National Fund for Regional Development).

In this case, the text is considered very simple because the constitutional amendment of the reform already dealt with the division between the states of the fund’s resources, which will be financed by the federal government to finance investments in the least developed regions of the country.

The hammer has not yet been struck and depends on negotiation with the president of the Chamber, Arthur Lira (PP-AL), who, on Tuesday (19), publicly urged Haddad to immediately send the projects for the rapporteurs to define.

At dinner with the FPE (Parliamentary Entrepreneurship Front), Lira returned to making demands and defended approval in the first semester.

Lira and Haddad were left to agree on the voting schedule, which has not yet been announced. There are doubts among President Lira’s allies about the Ministry of Finance’s ability to deliver the projects at the beginning of April, as initially thought.

The submission deadline, which has been discussed in Congress, is May, because the proposals still have to pass the scrutiny of the legal areas.

At the Ministry of Finance, the information is that legal channels are already following or will be invited to follow the discussion on the texts before their formal sending. The proposal is to speed up processes with this procedure.

Lira wants to approve the reform regulations in the first half of the year, in June, taking advantage of the voting window before the calendar of municipal elections disrupts the process.

The risk of voting facing more difficulties after the municipal elections, a period already close to the electoral race for the presidency of the Chamber and the Senate, is seen as higher.

The information published by the Panel column, from Sheet, that members of the Lula government have said that there is no need for the bills to be approved in 2024, due to this year’s busy legislative agenda and the tightness of the calendar due to the municipal election, has turned on the yellow light for these behind-the-scenes movements in Brasilia.

Concerned about the possibility of the climate of skepticism regarding the regulation taking shape, the minister himself told the column, this Thursday (21), that it is a priority for the government to approve the regulation in 2024.

The systematization commission, created by the Treasury to synthesize the proposals and define the general scope of the projects to be presented to Minister Haddad, has not yet received proposals from all 19 groups. The commission is coordinated by the extraordinary secretary of Tax Reform, Bernard Appy. Its members signed a confidentiality agreement to join the commission.

The deadline for sending proposals to the commission was the 15th. Some of the groups are having more heated debates and have not reached consensus.

One of them is the one that deals with the rules for the Manaus Free Trade Zone and the way in which tax credits for new taxes are operationalized via the split payment system — the tax amount is collected automatically. And the tax credit for the supplier goes directly to him.

In other words: through the mechanism, the bank separates, at the time of payment, the tax for the government coffers (federal, state and municipal) and the amount allocated to those who provided the good or service. But the most controversial regulation has been the Selective Tax.

People who participate in discussions at the Ministry of Finance informed the Sheet The objective is to send the projects as soon as possible, in the first half of April. The atmosphere is exhausting, with technicians working every day until the early hours of the morning to complete the work.

⁠The working groups’ proposals should be completed this week. For items that have not eventually reached consensus, the dissent will be made explicit and it will be up to the systematizing committee to decide. If the commission also fails to reach consensus, the same procedure will be adopted. In other words, the final word will be Haddad’s.

In Congress, two projects have already been filed that deal with the regulation of the reform prepared by parallel groups created by the FPE — one of them on the Selective Tax. According to the director of FPE, João Henrique Hummel, who organized the groups, the next project to be presented will be to define the products in the basic food basket, which will be exempt from taxes. “Congress will have a leading role in regulation,” he said. For him, it will be up to Lira to decide whether the parliamentarians’ projects will be added to the government’s.

Tax expert Luiz Bichara, who has participated in the discussions and was heard by the working groups, said he feared the vote would be rushed. “There is enormous concern about the Selective Tax,” he said.

“We cannot distance ourselves from the premise that only items harmful to health or the environment can be taxed, the consumption of which is intended to be discouraged. So now Brazil wants to discourage mining and oil extraction? Is no one worried about the trade balance? “, he questioned.